Below are Frequently Asked Questions about Large Apartment Real Estate Investing that will help you decide if this is a stream of income you would like to add to your life.
Real estate syndication harnesses the buying power of a real estate private equity firm into a preselected commercial project. A sponsor such as Anthem Capital identifies a property with characteristics that allow for maximum return potential and organizes a group of investors via a 506b or 506c offering into a syndicate to pool their money towards its purchase. In this way, investors can access higher potential properties than each individual could purchase on their own.
The differences are small but a 506b allows for some investors to be sophisticated, but not accredited investors, whereas a 506c requires all investors to be accredited and be verified via additional measures. (For more information on accredited investors see question 17 and 18 below.) Additionally a 506b deal can only be offered through a private network of preexisting relationships whereas a 506c can be advertised to the general public on platforms such as Twitter, LinkedIn, Facebook, Instagram, etc.
Multifamily real estate properties, such as apartment complexes, are some of the most profitable and stable projects for real estate syndicates. The sponsor revitalizes the property and handles the day-to-day management. In time this generates both passive incomes for the investors and the eventual realization of a return on the principal investment when the property is sold.
The investment process begins when a team of general partners identify an A, B, or C class residential property with at least 60 units in landlord/business friendly states that also fits the below criteria found in question 5. Once the property is identified and underwriting proves successful, a presentation is created and presented to a group of passive investors. Once the project is fully funded and the deal is closed, the lead team will hire a new management team, make upgrades to the apartment units as well as the overall property, and create strategies to retain tenants, increase occupancy, and increase rental income. After about the first 6 months, investors should begin to receive quarterly cash flow distributions. After ~5 years, the lead team will list and sell the improved property and investors will receive a return + their principal investment back.
This varies from deal to deal, but the general targets are:
To get a comparison on this form of investing vs other alternatives keep scrolling down this page to compare and contrast your investment choices.
*Note: Talk with your CPA on how the tax depreciation would work as a passive investor. This is an extra bonus above the cash yield and equity multiple.
We cannot guarantee returns and if somebody does guarantee a return that is a red flag. We can say with 95% confidence that you will not lose your initial investment in the deal. An example of a nightmare investment, that Anthem was not involved in but one of our leaders was a passive investor in occured in January 2020 in Dallas, TX. Immediately after closing on the property, Covid hit and the eviction moratorium was set. This created unforseen delinquencies in rent payment. Compounding that impact Texas was hit with unusually low temperatures in the Winter of 2021 which led to several hundred thousand dollars of property damage that was not covered by insurance. To make matters worse, the property management team was not performing to expectations and a new team had to be brought on board. Despite all of these issues the original investment of $75k has received $2k in contributions and the original principal has been returned in full after the sale of the distressed asset. Is it the 8% cash flow during the holding years and the projected 1.7x-2x equity multiple? No, but at least the investment is still in the positive even in the event of 2 black swan like events occuring in that investment.
Current tax codes allow for bonus depreciation through 2023 that allows you to accelerate to year 1 all 5 and 15 year assets at the property identified during a cost segregation study. The rough estimation is that depreciation is 30% of purchase price. Ex. If you buy a $10M property, then $3M will show up in year 1. That $3M will then be distributed proportionately based on your capital contribution. If a typical capital raise is 30%-35% of the total purchase price then an investor could hope to write off nearly 100% of income loss in year 1 of the investment. Please note, this is not a guarantee, the tax advantages range anywhere from 50%-100% and your CPA should be consulted to determine if you are able to take advantage of these benefits.
Prior to closing a deal, general partners will reach out to potential passive investors with information on the upcoming deal and a date/time scheduled for the informational webinar presented by the lead team.
Once the property is live, investors in the property will see a monthly update that looks something like this.
This varies from deal to deal, but normally it is a 75/25 or 80/20 split of proceeds with 75%-80% going to passive investors and 20%-25% going to the active partners. Additionally, the general partners receive a 1.5-2% asset management fee based on gross income/month at the property.
The monthly asset management fee is used to reinvest in your investment. This cash flow enables us to pay for the CPAs generating your K1s, the lawyers ensuring your investment is safe and legally compliant, the tax attorneys looking to maximize the return on your investment, and our boots on the ground efforts to ensure the business plan is being executed with excellence.
Please note that our asset management fee is based on the gross income/month of the property whereas the typical asset management fee is taken as a percentage of total assets under management. Example the value of a property we purchase might be $30M, but the gross annual income might be $3M. A 2% asset management fee on $30M is $600k/yr, whereas a 2% asset management fee on $3M is only $60k/yr or 10x less than how another group might charge you for managing your asset.
Yes. We have skin in the game and always put at least $100k of our own money on top of the liabilities we assume as GPs on the deal.
Anthem will always be a GP in any deal that we bring forward to you. However, we will have a number of partners that we trust and will work with if the right return is there for us to invest.
We take our due diligence seriously and are conservative in our underwriting. Come attend one of our future deal webinars to see how we evaluate a typical deal or join our monthly office hours that share in detail all of the questions we look to answer before making an investment. If you like looking at data, then contact us about our detailed pro forma analysis we do on every deal.
It is not a hard and fast rule that we will hold a property for 5 years. The average has been 5 years or less to buy a property, make the updates, and optimize the NOI before listing again for sale. A deal could go full cycle in 3 years if the timing is right, but we want to be conservative so that you are aware that your investment will be illiquid for at least 5 years.
The minimum investment is $50,000 with average investments being $100,000. We will give preference to people investing larger dollar amounts.
You’re an accredited investor if you meet at least one of these qualifications:
If you’re an entity, you must meet at least one of these qualifications:
When we have a deal, we will bring it to your attention and set up a corresponding webinar to give you further details. Reminder tomake sure you have confirmed your email address so that you are receiving these important emails.
Yes. You can use the below language to provide enough details to your friends or family. If they are interested, but not accredited investors then we would need to talk with them directly to ensure we are SEC compliant on preexisting relationships.
“I have been working with Anthem Capital, a group that is big on large apartment real estate investing. They tend to have at least 1 deal to invest in per quarter with the minimum investment being $50k and average investment per investor closer to $100k.
Top lines of these deals are:
If you would like to connect with them, then I suggest you go to their website and request access to their future deals. ”
If you are interested, then please let us know your potential investment amount for the future by filling out this 1 minute form (same link to the subscription form) so we can ensure you are in the deal pipeline.